Six federal financial regulatory agencies have introduced joint standards for assessing whether the organizations they oversee have proper policies and practices in place with regard to workplace diversity.
The agencies – including Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission – are now seeking feedback from industry stakeholders regarding the proposed standards, which cover the following four key areas:
- Organizational commitment to diversity and inclusion;
- Workforce profile and employment practices;
- Procurement and business practices and supplier diversity; and
- Practices to promote transparency of organizational diversity and inclusion.
The proposed standards are intended to promote transparency and awareness of diversity policies and practices within most financial institutions – including mortgage firms.
The proposed standards account for variables including the size of the organization, number of employees, governance structure, income, number of members or customers, contract volume, location and community characteristics. What's more, the agencies recognize that the proposed standards may need to change and evolve over time.
As per Dodd-Frank, each of the aforementioned federal regulatory agencies has established an Office of Minority and Women Inclusion (OMWI) that is required to develop standards for assessing diversity policies and practices in the regulated financial organizations.
Each OMWI solicited input from the organizations it oversees, as well as appropriate industry trade groups, in order to develop the proposed standards.
Now, the six agencies are putting the standards out for public comment for 60 days.
The proposed standards would require mortgage banking firms and other financial institutions to have well-formulated diversity plans in place, as well as a senior officer who is in charge of maintaining the diversity plan and upholding its enforcement. Each financial institution must take ‘proactive steps to promote a diverse pool of candidates, including women and minorities, in its hiring, recruiting, retention and promotion, as well as in its selection of board members, senior management and other senior leadership positions,’ the proposed standards state.
Each financial organization must also have in place systems for tracking and analyzing workforce data to ensure it is meeting the proper level of diversity for its size, as established under the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP). Organizations that are not subject to EEOC or OFCCP rules would also be required to have such systems in place.
The proposed standards also require financial organizations to achieve ‘supplier diversity’ by working with a wide range of suppliers, including those that are women-owned or minority-owned, including tracking and making available how much money they spend with those suppliers.
Finally, the proposed standards require financial institutions to make their diversity policies and practices ‘transparent,’ so that the public is aware of those policies and practices. To achieve this, an organization can post its diversity plan on its website and also make announcements regarding new hires and promotions. In addition, each organization will have to demonstrate the extent to which it has established a diverse workforce, by providing a demographic breakdown, as well as the diversity of its suppliers and other business partners.
For more information about the proposed standards, including how to submit a comment, click here.